Department of Heavy Industry Ministry of Heavy Industries & Public ...

Recommendations for 12 th Five Year Plan for Capital Goods & Engineering Sector 39
High tax incidence: Present tax structure is in favor of imports. Needs
to be addressed, urgently to ensure level playing field.
Inadequate Infra-structure: The logistic support to Industry in terms of
transportation of raw materials and aggregates, lack of quality power
supply, lack of quality water supply etc. are adding to the operating cost
and finally eroding competitive advantage of the domestic players.
Dumping by Low Cost Countries: LCC countries are dumping their
products in India, without adequate after market support. These
products are of very low quality and low life, though the initial cost is
very attractive. Domestic industry faces cost disadvantage vis- a-vis
overseas suppliers, especially, China/Taiwan/Korean that are dumping
their products in India backed by huge export incentives given by their
governments. The requirement of mining and construction sector is for
spare parts and service support for a period of 7 to 10 years and very
often the supplies from LCC fail to meet this requirement.
Man Power: The protective labor law is an inhibiting factor for creating
a vibrant industrial atmosphere and comes in the way of pushing up
labor productivity levels to global standards. Further over the last
decade, talent acquisition and talent retention in Mining & Construction
industry has been a major challenge, mainly due to the availability of
other attractive options such as IT and ITES industry.
Uninhibited import of used equipment: Import of second hand
equipment while lowering the initial acquisition cost for the projects
hurts both users and equipment manufacturers in the long run. This
needs to be regulated.
Lack of soft financing by financial institutions and Banks: M&C
machinery industry is highly capital intensive involving high
manufacturing lead time. In order to offset high interest costs, there is a
need for support from FI's and banks to offer low interest rates. This
would also facilitate setting up of more ancillaries as well as aggregate
manufacturing facilities by JV's and MNC's thus adding to the depth of
domestic manufacturing.
CAPITAL GOODS AND ENGINEERING SECTOR OCTOBER, 2011